Global real wages grew at their fastest pace in more than 15 years in 2024, as easing inflation helped repair workers’ purchasing power after the cost-of-living shock unleashed by the pandemic and the subsequent surge in prices. According to the International Labour Organisation’s Global Wage Report 2024–25, real wages rose by an estimated 2.7 per cent last year.

That marked a decisive reversal from 2022, when runaway inflation drove real wage growth to –0.9 per cent, its first negative reading since comparable global records began in 2006. The recovery gathered pace after a tentative improvement in 2023, when real wages increased by 1.8 per cent as price pressures began to subside, allowing earnings to once again outstrip inflation.

The report attributed the stronger wage performance largely to a sustained decline in inflation, particularly in advanced economies, where price pressures eased faster following aggressive monetary tightening and the fading of energy and food price shocks. However, it stressed that the recovery has been uneven across regions and income groups, with many workers still struggling to regain income lost during the peak of the inflation crisis.

Excluding China, whose rapid wage growth has a significant influence on the global average, global real wage growth in 2024 is estimated at 2.3 per cent, the report said. Among G20 economies, a clear divergence persists between advanced and emerging markets. Advanced G20 economies recorded real wage declines for two consecutive years in 2022 and 2023 before returning to modest positive growth of 0.9 per cent in 2024. By contrast, emerging G20 economies maintained positive real wage growth throughout the inflationary period, recording increases of 1.8 per cent in 2022, 6.0 per cent in 2023, and 5.9 per cent in 2024.

At the regional level, wage trends remain highly heterogeneous. Asia and the Pacific, Central and Western Asia, and Eastern Europe posted the strongest real wage growth, benefiting from faster economic expansion and lower inflation in recent years. Africa and the Arab States lagged behind, with average real wages remaining broadly flat in 2024, reflecting persistent inflationary pressures, high informality and limited fiscal space to support incomes.

Despite the rebound in wages, the ILO warned that wage inequality remains strikingly high worldwide. Globally, the lowest-paid 10 per cent of wage earners receive only about 0.5 per cent of the total wage bill, while the top 10 per cent capture close to 38 per cent, underscoring the depth of income disparities in labour markets.

The report found that wage inequality has declined in roughly two-thirds of countries since the beginning of the 21st century, with stronger gains recorded in low- and lower-middle-income countries. However, progress has been uneven, and inequality at the bottom end of the global wage distribution has increased, driven by weak real wage growth in the world’s poorest countries.

Minimum wage policies provided some protection against rising prices, but the ILO said they were often insufficient. Data from 160 countries show that while many governments adjusted minimum wages during the inflation surge, around 45 per cent of countries still saw minimum wages fall behind inflation, eroding the purchasing power of low-paid workers. Even where real minimum wages increased in 2023, the gains were generally too small to offset losses suffered in previous years.

The report also highlighted that inflation has continued to hit low-income households hardest, as food and housing costs, which account for a larger share of spending among poorer families, have risen faster than headline consumer price indices in many countries.

Looking ahead, the ILO said sustaining wage growth and ensuring it translates into reduced inequality would require stronger wage-setting institutions, including effective minimum wages and collective bargaining, as well as policies to tackle informality, gender pay gaps and low productivity. Without such measures, the organisation warned, recent gains in real wages could prove fragile in the face of ongoing geopolitical tensions, climate risks and economic uncertainty.